Jan 2020: FB $205- $215 Bull Call Spread

Stock

FB

Trade Structure

$205- $215 Bull Call Spread

Trade Date

01/30/2020

Expiration Days

02/21/2020

Trade Rationale

As mentioned in my book, I don't participate in earnings because they are binary events with unpredictable outcomes. However, I have my own way of participating in earnings. Instead of trading before earnings, I wait for earnings to be over. In Facebook's case, although they beat earnings, the earnings weren't "good enough" for the market and the resulting 7% pullback is extreme in my opinion. This is a a mean reversion trade, although I will not be using my typical indicators for this as this is a post earnings event. I bought a $205 - $215 Bull Call Spread, risking $480 to make $480 in 21 days.

Trade Selection Criteria

Overall market movement

DOW dropped 200 points today due to the ongoing corona virus scare. 

No Earnings or Significant News

Earnings are behind us and were announced on 1/29

Bollinger Bands outside Keltner Channels

N/A – This is not a mean reversion trade in the traditional sense (i.e the typical mean reversion trades I normally do). So, we can’t use any of our usual indicators here.

N/A

RSI Analysis

N/A – This is not a mean reversion trade in the traditional sense (i.e the typical mean reversion trades I normally do). So, we can’t use any of our usual indicators here.

N/A

ADX Analysis

N/A – This is not a mean reversion trade in the traditional sense (i.e the typical mean reversion trades I normally do). So, we can’t use any of our usual indicators here.

N/A

Trade Analysis

Analysis will be updated, when we close the Trade

Trade Outcome

Pending

Profit/Loss

$N/A

Beginning Account Balance

$16,400

Ending Account Balance

$

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